AGDC awards contract for design of North Slope gas plant

The state-owned Alaska Gasline Development Corp. has signed a $6.7 million contract with a Fluor/WorleyParsons joint venture to do preliminary engineering on a $1.7 billion gas conditioning plant at Prudhoe Bay.

AGDC is an independent state corporation working on a 36-inch, in-state natural gas pipeline from the North Slope to southern Alaska.

Fluor/WorleyParsons are working under their Arctic Solutions joint-venture.

"The preliminary design work is necessary to keep our pipeline on schedule. Our goal is a long-term natural gas solution for Alaska," spokeswoman Leslye Langla said.

If the project stays on schedule, which will depend in part on the state Legislature's approval of additional funding this year, AGDC will conduct an open season for potential shippers in late 2014, Langla said.

House Bill 4, which grants funding as well as regulatory flexibility for the in-state gas pipeline and other provisions, moved out of the House Resources Committee to the Finance Committee March 4.

Langla said the gas treatment plant design would be for a treatment plant processing 500 million cubic feet of gas per day, which is the limit that can be shipped over an in-state line receiving state support agreed to by the state with TransCanada Corp. under the state's Alaska Gasline Inducement Act contract with the company.

If the contract is changed so that the state can ship more gas through the in-state line the process plant capacity can be expanded by adding additional process units, Langla said.

The state is developing the project as a backstop plan to get North Slope gas south to Fairbanks, in Interior Alaska, where residents must use oil for space heating and power generation, and to Southcentral Alaska, where regional gas supplies are running low.

If North Slope producers and TransCanada Corp. proceed with their plan for a larger pipeline and liquefied natural gas project, the AGDC's in-state pipe could become a spur line off that larger pipeline, Dan Fauske, CEO of AGDC has said in interviews.

Alternatively, the AGDC project could be folded into the larger industry pipeline/LNG plan if the state decides to become an equity partner in that project, Fauske has said, and the state corporation could be a vehicle for the state investment.

AGDC's project is for a pipeline from the North Slope to Southcentral Alaska, a route that parallels the existing trans-Alaska pipeline system to Interior Alaska and would then essentially follow the route of the Parks Highway to the Matanuska Susitna Borough north of Anchorage.

The industry sponsors of the large pipeline/LNG project  BP, ConocoPhillips, ExxonMobil and TransCanada, a pipeline company  have not yet settled on a route but it also would parallel the TAPS line to the Interior. If a location near Anchorage is decided for the large LNG plant the pipeline would follow the Parks Highway on a route similar to that chosen by AGDC.

If a different LNG plant location is chosen, Valdez for example, the large gas pipeline would continue to generally follow TAPS to Valdez. Gas could then move to Southcentral Alaska over a spur line.

Besides the engineering work done to date and a right-of-way that has been granted for state lands, one key asset AGDC now holds is an approved federal environmental impact statement, or EIS, for its 737-mile pipeline. The final EIS has been issued but AGDC is still waiting for a Record of Decision giving the government's final stamp of approval on the document.

The EIS will need to be modified, which will require a Supplemental EIS, since the design of the project was changed recently from a 24-inch pipeline to 36 inches, but much of the important work on an EIS relating to environmental impacts would relate to both pipe sizes and has been done.